Eminent Domain Bleg
By David Henderson
I’m fairly certain that most infrastructure projects like pipelines or electrical transmission corridors would *never* get built without the government power of eminent domain.
That’s a reasonable view, and it was my view before I learned something new in the late 1970s or 1980. Now I can’t find the reference because the publication lasted only a few years and my copy was consumed in my 2007 fire.
So I have a request. The odds that someone will be able to find this publication are low, but here goes. First, the background.
In 1979 or 1980, Reason magazine or the Reason Foundation–I’ve forgotten which–started publishing a short inside-the-libertarian-movement newsletter. The newsletter was called either Frontline or Frontlines. It had an anti-Cato thrust. At the time, there was fierce rivalry and bad blood between some people at Reason and some at Cato, especially Ed Crane. Charles Koch was, at the time, a major supporter of Cato.
Someone in a Frontline article wrote a criticism of Koch Industries. The author charged Koch Industries with being unlibertarian because the company used eminent domain to build pipelines. So far, this sounds similar to what Tom West is saying.
But then, an issue or two later, if I recall correctly, Charles Koch wrote a response saying, basically, yes, we do use eminent domain and yes, that is unlibertarian. But he went on to point out that Koch Industries had traditionally been successful at building pipelines without using eminent domain. My memory is sketchy here, but I think Charles said that some government, I think the feds, had made it hard with disclosure regulation for companies that wanted to build pipelines to conceal their intent. Concealment is crucial because of the holdout problem. To take a numerical example, if the value of a pipeline, in excess of construction cost (not including acquisition of right-of-way) is $100 million, and there are 1,000 properties whose owners would each be willing to sell their right of way for $80K, there is a $20 million surplus to play with. And the margin could easily be slimmer. So if people on the path find out in advance, many of them will be holdouts who try to get a lot of the surplus. If enough people do this, the deal won’t happen, even though, in this hypothetical, it would be in everyone’s interest for the rights of way to be granted.
So here’s my question: Am I remembering correctly? And my bleg: does someone have a copy of the original article and Charles Koch’s response, a copy that he/she is willing to share?